BofA Elevates Taiwan Semiconductor (TSM) Price Target to $590 Amid US Expansion Success

Key Takeaways

• Bank of America reports TSMC’s Arizona manufacturing facility is advancing successfully, with revenue jumping 17% sequentially and 145% annually.
• BofA analysts increased their TSM price objective to $590 while reaffirming their Buy recommendation.
• The chipmaker’s board greenlit $29B in American capital investments, representing approximately 99% growth versus the prior year.
• Shares began trading at $430.33 on Tuesday, approaching the 52-week peak of $479.00, with Wall Street’s consensus target at $524.25.
• Ballentine Partners expanded its TSMC holdings by 6% during Q2, now holding 45,094 shares valued at approximately $21.5 million.

Trading commenced at $430.33 for TSM shares on Tuesday, hovering near the stock’s 12-month pinnacle of $479.00, as Bank of America reinforced its optimistic outlook on the semiconductor giant.

Taiwan Semiconductor Manufacturing Company Limited, TSM

In a research note distributed to investors, BofA analyst Haas Liu indicated that TSMC’s American manufacturing operations are “progressing well.” The Arizona facility generated NT$45 billion in second-quarter sales, representing a 17% sequential increase and a remarkable 145% year-over-year gain, now contributing 4% to TSMC’s overall revenue stream.

Liu’s analysis also revealed that TSMC’s net profitability margins at its Arizona facilities, when excluding government subsidies, remained stable at 38% in Q2 2026. This marks a dramatic improvement from the approximately -90% loss margin recorded in 2025, demonstrating substantial operational advancement.

The company’s board recently authorized $29 billion in United States capital allocations, effectively doubling the investment level from the previous year. Liu projects capital expenditures will reach the guidance midpoint of $62 billion throughout 2026, with potential expansion to $80-$85 billion during 2027.

Profitability Metrics Remain Robust

Notwithstanding substantial capital investments, Bank of America anticipates TSMC’s gross profit margins will remain resilient in the high-60% territory. Liu identified robust demand for high-performance computing solutions and premium mobile processors as the primary factors supporting margin strength.

Depreciation expenses are projected to expand at approximately 20% compounded annually between 2026 and 2028, correlating with the expansion of cutting-edge and specialized manufacturing capabilities. This encompasses a strategic partnership with Sony for image sensor manufacturing, scheduled to begin production in 2029.

Bank of America elevated its TSM price objective to $590 from the previous $490 level, maintaining its Buy recommendation. This target suggests potential appreciation of approximately 37% relative to Tuesday’s opening price.

Wall Street Consensus Leans Bullish

The investment community broadly supports TSMC’s prospects. Among analysts tracking TSM, three maintain Strong Buy ratings, eleven recommend Buy, and only two assign Hold ratings. The mean price objective stands at $524.25.

Needham increased its price objective to $530 from $480 in late July. DA Davidson adjusted its target upward to $500 from $450. Zacks elevated TSM to Strong Buy status in mid-July.

The sole contrarian perspective emerged from Weiss Ratings, which downgraded TSM from Buy to Hold on August 12th.

Among institutional investors, Ballentine Partners increased its TSMC allocation by 6% during the second quarter, acquiring 2,566 additional shares to reach 45,094 total shares, representing approximately $21.5 million in value.

Multiple other investment firms similarly expanded their positions throughout Q1 and Q2, including Twin City Private Wealth, Graves Light Lenhart Wealth, and Wealthcare Capital Partners.

The company posted second-quarter earnings of $4.28 per share on sales of $39.89 billion, achieving a net profit margin of 50.31% and return on equity of 39.37%. Wall Street analysts project full-year earnings per share of $16.44.

Corporate insiders also demonstrated confidence during the period. Vice President Shyue-Shyh Lin acquired 1,000 shares at $74.13 on July 21st, while Vice President Lipen Yuan purchased 1,000 shares at $79.19 in late June.

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